REGULATION OF US DERIVATIVES AND TITLE V OF THE FUTURES TRADING PRACTICES ACT OF 1992
| Pages | 99-102 |
| Date | 01 January 1992 |
| DOI | https://doi.org/10.1108/eb024756 |
| Published date | 01 January 1992 |
| Author | THOMAS A. RUSSO,MARLISA VINCIGUERRA |
| Subject Matter | Accounting & finance |
REGULATION OF US DERIVATIVES AND TITLE V OF THE
FUTURES TRADING PRACTICES ACT OF 1992
Received: 12th November, 1992.
THOMAS
A. Russo
MARLISA
VINCIGUERRA
THOMAS
A.
Russo
IS A PARTNER IN THE US LAW FIRM
CADWALADER, WICKERSHAM
&
TAFT.
MARLISA VINCIGUERRA
IS AN ASSOCIATE OK THE FIRM.
ABSTRACT
The paper starts by setting out the regula-
tory structure for derivatives markets in the
USA and some of the problems associated
with it.
It then considers the provisions
afforded
by Title V of the Futures Trading Practices
Act of 1992 and the extent to which these
redress
regulatory uncertainty.
INTRODUCTION
During the past two decades, the
rapid growth of the derivatives
markets and the emergence of
innovative derivative products have
presented challenges to the regula-
tory structure governing the US
financial markets. Regulation of
derivatives in the USA has become
problematic because, for historical
reasons, US legislation divides regu-
lation of financial products based
upon whether a product qualifies as
a 'security', subject to regulation by
the Securities and Exchange Com-
mission (SEC), or a 'futures contract',
subject to exclusive regulation by
the Commodity Futures Trading
Commission (CFTC). Accordingly,
uncertainty has arisen for derivatives
that have attributes of both securi-
ties and future's contracts, such as
hybrid debt transactions and equity
based swaps. In addition, uncertainty
has plagued the over-the-counter
(OTC) derivatives markets by virtue
of the CFTC's exclusive jurisdic-
tion over futures contracts and the
statutory requirement that futures
contracts must be traded only
on CFTC-designated commodity
exchanges.
Past efforts to redress the adverse
effects of this structure have encou-
raged markets for specific types of
derivatives, but have failed to ad-
dress the uncertainties engendered
by bifurcated regulation and CFTC's
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